Business Ethics as Competitive Advantage for Companies in the Globalization Era

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Business Ethics as Competitive Advantage for
Companies in the Globalization Era

• Rania Ahmed Azmi
• Assistant Lecturer, PhD Researcher
• Business Administration Department
• Faculty of Commerce - Alexandria University
• E-mail rania.a.azmi_at_gmail.com
• July, 2006

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Introduction

• Ethics is the study of our web relationships with
  others.
• Companies do not operate in a vacuum but rather
  are plunged in a universe of relationships with
  multiple stakeholders.
• With the globalization the scenario in which
  companies operate has become even more complex,
  given the emergence of global groups of
  stakeholders.

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Introduction

• The need for a company to behave ethically is
  described in terms of a companys need to
  interact productively with its stakeholders.

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Business Ethics

• Business Ethics means conducting all aspects of
  business and dealing with all stakeholders in an
  ethical manner

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Business Ethics as Competitive Advantage for
Companies in the Globalization Era
Globalization, Business Ethics Competitive
Advantage
Business Ethics as Competitive Advantage
Business Ethics Competitive Advantage
Ethics of Scandal Versus Ethics of Strategy
Concluding Remarks
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Globalization, Business Ethics Competitive
Advantage
Business Ethics Competitive Advantage

• Globalization has brought about greater
  involvement with ethical considerations and most
  importantly achieving competitive advantage
  through business ethics.
• Globalization and business ethics are linked as
  they affect a companys ability to commit to its
  shareholders, in particular to external
  investors, and preserve the trust needed for
  further investment and growth.

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Ethics of Scandal VersusEthics of Strategy

• It is increasingly important for companies to
  deal with ethics as a corporate strategy that, if
  uniquely implemented, could achieve competitive
  advantage for the company rather than waiting to
  react to possible ethical issues of importance to
  the targeted stakeholders.
• It is the necessity of being ethically proactive
  company rather than being ethically reactive
  company.

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Business Ethics as Competitive Advantage

• As the speed of comparable tangible assets
  acquisition accelerates and the pace of imitation
  quickens, firms that want to sustain distinctive
  global competitive advantages need to protect,
  exploit and enhance their unique intangible
  assets, particularly integrity (building firms of
  integrity is the hidden logic of business
  ethics).

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Business Ethics as Competitive Advantage (Cont.)

• behavior that is trusting, trustworthy, and
  cooperative, not opportunistic, will give the
  firm a competitive advantage.
• Sustainable global competitive advantage occurs
  when a company implements a value-creating
  strategy which other companies are unable to
  imitate.
• For example, a company with superior business
  leadership skills in enhancing integrity capacity
  increases its reputation capital with multiple
  stakeholders and positions itself for competitive
  advantage

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Business Ethics as Competitive Advantage (Cont.)
Business ethics as competitive advantage
involves effective building of relationships
with a companys stakeholders based on its
integrity that maintains such relationships.
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Concluding Remarks

• An integrity approach to business can yield
  strengthened competitiveness it facilitates the
  delivery of quality products in an honest,
  reliable way. This approach can enhance work
  life by making the workplace more fun and
  challenging. It can improve relationships with
  stakeholders and can instil a more positive
  mindset that fosters creativity and innovations
  among the stakeholders.
• The purpose of ethics is to enhance our lives and
  our relationships both inside and outside of the
  organization.

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This cartoon implies the importance of shifting
from the ethics of scandal to the ethics of
strategy Ethics is simply the proper way to
conduct business and, despite what the cartoon
says, a responsible business is risk-free.
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Concluding Remarks (Cont.)

• As the competitive environment with globalization
  could be characterized by the game metaphor
  rather than the war metaphor, it is increasingly
  important to include ethics in the corporations
  strategy and potentially implement it in a way
  that achieves a competitive advantage for the
  company and adds value to the stakeholders.

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Concluding Remarks (Cont.)

• The metaphor of a game sees competition in
  business as an exciting game, in which each
  competitor strives to achieve excellence, satisfy
  customers, and succeed as a result. The motive
  in this type of game is not to drive out the
  competition, but to work hard, play by the rules
  of the game, and do ones best in order to
  succeed.

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Business Ethics as Competitive Advantage for
Companies in the Globalization Era